Course 306 – Best Days of the Week to Trade Forex

Now we’ve learned that the London session is the busiest of all the sessions, it’s also noted worthy to know that there are also certain days in the week when all the markets tend to exhibit stronger movement.

Below is a chart of the average pip range for the major pairs for each day of the week:

TABLE

From the chart above, it’s obvious that trading is best done during the middle of the week since this is when it’s most active in the markets.

On Fridays, business is pretty much half day because it’s usually busy until 12:00 pm EST and then the market slows down until it closes at 5:00 pm EST. This means we only work half-days on Fridays.

You can say “Thank God it’s Friday” right after 12:00 pm EST.

Because of these factors, we’ve familiarized ourselves with the busiest and best days of the week for trading forex.

The busiest times are usually the best times to trade since high volatility comes with more opportunities.

TIME MANAGEMENT

It’s important that every trader learns when to trade and when not to. Though the forex market is open 24/7, it doesn’t mean that the market is active at all times!

Even if it were, you would need time to sleep. Remember sleep is necessary for healthy living and you’ll definitely need to take time out to rest if you plan on becoming a successful currency trader.

Here’s a quick guide on the best and worst times to trade:

BEST TRADING TIMES

• When two sessions overlap. These are also the times when major release of news reports that could start some volatility and set the next pace. Take note of the Opening and Closing times as well.
• The European session has overtime proven to be the busiest out of the three.
• Mid week usually shows the strongest movement, since the pip range widens for most of the major currency pairs.

THE WORST TRADING TIMES

• Sundays– everyone is taking time out to rest!
• Fridays– liquidity thins out after 12:00pm EST of the S. session.
• Holidays– Nobody is working.
• Major news events– you don’t want to find yourself between the devil and the deep blue sea.

And if you can’t seem to trade during the peak sessions? Don’t panic.

You can always be a swing or position trader. We’ll be learning about that later.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

In forex trading, liquidity is highest when there are more people participating in the markets.

It’s only rational to think that this happens during the overlap between two sessions. Well, that’s not totally correct.

Let’s learn about some of the characteristics of the two overlap sessions to see why it’s so.

TOKYO – LONDON OVERLAP

Liquidity during this session is slow for some reasons. At this time, movement is minimal on the Asian side of the session, because this is about afternoon time when traders go for lunch breaks.

Their European counterparts on the other hand are just trickling into offices at this time, this means trading becomes slow and boring as liquidity thins out.

This would be an ideal time to take a break or look for potential trades to engage for the London and New York sessions.

LONDON – NEW YORK OVERLAP

It gets super duper active at this time of the day. It is the busiest time of the day; traders from the two largest financial centers (London and New York) are working at this time.

It is also during these sessions that there are strong moves, especially because economic reports from the U.S. and Canada are released about this time too.

The markets are also sometimes shaken by “late” news releases from Europe at this time too.

Trends established earlier during the European session, might just go on, as U.S. traders would normally start out by choosing their positions and strategies based on information from happenings in the earlier sessions.

You should however be careful because towards the end of this session, some European traders may be closing their positions, and this could lead to some significant changes just before lunchtime in the U.S.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

In an interesting cycle, the European market participants begin their day just when their Asian counterparts are rounding off for the day.

London remains a major focus for market participants even though there are a good number of financial centers all around Europe.

It comes as no surprise that London is seen as the forex capital of the world as thousands of businessmen make transactions by the minutes. Besides, London has always been known as a major trade hub because of its strategic location.

About 30% of all forex transactions occur during the London session.

Below is a table of the London session pip ranges of the major currency pairs.

TABLE

These pip values were derived based on the averages of past data. Take note that these are not constant values, and these values can change, depending on liquidity and other market conditions.

Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some facts you should know about the European session:

• Tons of forex transactions take place during this session because London is a major financial hub and the London session at certain periods overlaps with the two other major trading sessions. This leads to high liquidity and potentially lower transaction costs, i.e. lower pip spreads.
• Naturally, the London trading session is the most volatile session because of the large amount of transactions that take place, the
• Most trends begin during the London session, and they typically will continue until the beginning of the New York session.
• Volatility tends to reduce in the middle of the session, as traders would usually go on breaks before awaiting the commencement of the New York trading period.
• Sometimes, trends switch at the end of the London session, as European traders may decide to lock in profits.

PAIRS YOU SHOULD TRADE IN THE LONDON SESSION?

The large volume of transactions that occur during this session, gives room for so much liquidity so that almost any currency pair can be traded.

However, it is advised that you stick with the majors (EUR/USD, GBP/USD, USD/JPY, and USD/CHF), as these normally have the tightest spreads.

Also, it is these pairs are usually the most directly influenced by any news reports that come out during the European session.

You can also try your hands on the yen crosses (more specifically, EUR/JPY and GBP/JPY), they tend to be pretty volatile during this session. Note that the spreads might be a little wider because these are cross pairs.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT